Knowledge Series : Loan against Property

We all need money for a variety of purposes right from funding your business to pay the fees of your child’s education. In case of a financial emergency, the most obvious question you would ask yourself is how and from where I would get my funds from to meet the sudden expenses? Today, one of the easiest ways to get funds is to avail a loan. If you own a property, you can use it to your advantage and get loan against property (LAP). 

If you don’t have any prior experience taking loans, you would want to understand what exactly is loan against property. It is essentially a loan that is disbursed by the financial institution against the property you wish to mortgage. The property you mortgage can either be a residential or a commercial property. It can be either be self-occupied or rented out to somebody else. 

Most of the leading housing financial companies in India like Indiabulls Housing Finance limited offer LAP. It is essentially a long term loan and is given for a period of 10 years or more. You can use the loan amount to meet your immediate financial requirements like consolidating your debts, funding your child’s marriage/education or investing more capital in your business. 

One of the main reasons why people opt for LAP rather than personal loan is that the loan duration is higher, the interest rate is competitive and more importantly you do not need to specify any reason to the lender. Before applying for LAP make sure that you do your research well about the lending institution in terms of the rate of interest, repayment terms, tenure and other related charges. Initial research would go a long way in helping you get the best loan deal. 

If you are availing home loan from Indiabulls Housing Finance Limited, you would  receive all the  assistance and information you need to make your loan availing experience easy and happy.

Applying for a Home Loan? Know the tax benefits associated with

Buying a home is one of the most important decisions one would make in their life. It is a dream for many to own a home. In the purview of the rising prices of the real estate property in India most of the people find it difficult to pay for their home out of their own pocket. Therefore, most people approach financial institutions like banks or private housing finance companies to make their home buying process easy. One of the obvious reasons why people take home loans is that the financial institutions provide a major proportion of the funds to buy their dream home. Another significant reason why people avail home loan is that it allows them to get tax benefits under the section 24(b) and section 80C of the Indian Income Tax Act, 1961.

Section 24(b) of the income tax act deal with the ‘Interest’ component of the home loan, whereas section 80C deals with the ‘Principal’ component of the loan. The maximum amount of tax deduction you can avail in one financial year is Rs. 1 lakh and Rs. 1.5 lakhs on the principal and the interest amount you repay.

If you are applying for home loan with a co-applicant you can enjoy joint home loan tax benefit. The tax deduction would be applicable to all the people involved in the loan. An important thing to know about the home loan tax deduction is that your deduction would depend upon the proportion of the loan you have availed. For example – if two people are applying for the loan in the ration of 3:2, then for the loan amount of 50 Lakhs would be spilt in the ratio of 30 and 20 lakhs. While calculating the tax deduction, the respective principal as well as the interest amount would be taken into consideration.

Another important benefit of applying for home on joint basis is that the lender would consider the income of both the applicants, which increase your loan eligibility. This in turn also maximizes your tax deduction. If you wish to buy a home that is under construction, then you can claim your tax deduction only after the completion of your home. If you want to rent out your home, then you would have to pay taxes on the amount of money you receive as rent. Getting a home loan is definitely a great benefit for your tax planning.

If you are availing housing loan from Indiabulls housing finance limited you are liable to get tax benefit under section 24(b) and section 80C of the Indian Income Tax, 1961. If you have any queries about the tax benefits, the loan executives at Indiabulls are always there for your help. We ensure that all your queries are answered and your loan application becomes simple.

Indiabulls Housing Finance – Leaders in Affordable Housing Finance Sector

Mr. Gagan Banga
M D & CEO
Indiabulls Housing Finance

Indiabulls Housing Finance Limited, one of the leading housing finance companies in India has ambitious plans to grow by 24 to 25% each year in the affordable housing finance sector. Mr. Gagan Banga, MD & CEO, Indiabulls Housing Finance Ltd, in his recent interview in Financial Express said that the company aims to focus on lending affordable home loans to the low risk customers.

In the interview he stated that affordable housing loan is their sweet spot and that the company aims to reach out to people who have an income of Rs. 75,000 to Rs. 1, 25,000 per month. He further stated that in the last 8 years IBHFL has built a good skill set in lending to the self-employed people. Today, nearly 30% of the Indiabulls home loan borrowers belong to the self-employed category and the remaining percentage are the salaried customers.

On the major trends in the Housing Finance sector, Mr. Banga said that the mortgage industry is growing at a slightly better pace than bank credit and within that the housing finance companies are growing at a better rate. Over the last six years the housing finance companies share has increased to 45% from 35% in the mortgage pie. Owing to the rising salaries of the entry level employees there is a phenomenal growth in the affordable housing loan segment. Mr. Ganga Banga said that since the growth in housing loans for properties that cost more than Rs. 2 crore is rather slow, most of the housing finance companies are focusing on the affordable home loan category.

Looking at the trend, over the past few years, Indiabulls Housing finance Ltd has been consciously concentrating more on the affordable housing sector than other segments because this segment has been giving reasonable returns. Mr. Banga feels since the return is good from the sector there is no need to do many things at a time. Over the next 10 years more self-employed people would apply for Home Loans and IBHFL’s expertise in this sector will help them grow at a steady pace

Important Facts to Know About Tax Benefits on Home Loan

Majority of the people in India who decide to buy their own home approach a financial institution for availing home loan. Usually, people depend on the loans to get a major portion of the finance for their home and the amount is a big sum. Just like other finance transactions there is certain tax implications related to home loans. The government of India tax benefits to all who avail home loan to reduce the burden of buying their dream home. If you are a first time borrower of home loan, you need to be aware of the following fact relating to the tax benefits:

• As per the Income Tax Act of India, 1961 both the principal as well as the interest components of home loan are subject to tax exemptions. If you have taken a home loan to either buy a new home or to construct home, you can file for tax benefit under the section 24(b) of the Indian Income Tax Act.

• You must know that there are certain limitations on the tax benefits you get on your home loan.  The maximum deduction you can get on the interest component of your home loan is up to 1.5 lakhs if the loan was availed on or after 1st April 1999. If you have taken a home loan, you need to buy or finish building your home within 3 years from the year in which the loan was availed to be eligible for the tax benefit.

• Under section 24(b) you can avail tax deduction on home loan even if you have borrowed funds from your relatives and friends. Whereas under section 80C of the income tax act, you cannot get tax benefit on loans borrowed from friends and relatives.

• You can avail the tax exemption on your home loan only if you continue to pay your monthly installments on a regular basis. If you fail to make you EMI payment on time, you cannot avail tax benefit on the amount you failed to pay.

• The maximum amount of tax benefit you can get on the principal component of your home cannot be more than Rs. 1, 00,000 under section 80C of the Income Tax Act. 

• As per section 80C of the income tax act, the tax deduction on the principal portion of your home loan is not applicable if you have availed loan for repair, reconstruction or renewal of your home property. On the other hand, the tax deduction on interest component of home loan under section 24(b) is allowed even for the loan taken for carrying out reconstruction, renewal and repair purpose of your home.

If you are availing home loan from Indiabulls Housing Finance Ltd you would be entitled to get tax exemption to the tune of Rs. 1,50,000 (maximum amount) on the interest component of the funds you have borrowed. Also, you can get a maximum tax deduction of Rs. 1, 00,000 on the principal amount that you repay towards your home loan

Knowing the Different Types of Home Loans in India

Over the past few years, the demand for home loans in India has increased tremendously. Everyday a large number of people apply for home loans to buy their dream home. The housing loan lenders in India provide home loan scheme not just for purchasing home but also for a variety of other related purposes to cater to the different needs of their customers. Some of the popular types of home loans available in the home loan market are discussed below:

Home Purchase Loan:
This is the most popular and commonly availed variant of home loan. You can avail home purchase home loan to get funds for buying a new residential property of your choice. If you are applying for this type of home loan, you must know that most of the housing finance companies in India provide a maximum amount of 85% of the actual market value of the property. The home purchase loan is usually given at fixed or floating interest rate. If you are availing home loan from Indiabulls Housing Finance Ltd you can get home loan only on floating interest basis.

Non-residential Indian home loans:
As the name suggests, this is a special variant of home loan that is meant only for the non resident Indians. The housing finance companies in India have developed NRI home loan schemes to help the NRIs to buy residential properties in India. The formality for availing this type of loan is pretty similar to usual home loan schemes that are offered to the Indian residents. Today, almost all the public and private sector banks and financial institutions offer NRI home loan. At Indiabulls Housing Finance Ltd we assist you at every step of the loan process to help you make your home buying experience a happy one.

Home Improvement Loan:

This type of home is availed mainly by people who already own a home but require funds to improve or renovate their home. You can use the funds to carry out repair works such as plumbing work, waterproofing, and electrical work, external and internal painting work.

Home Construction Loan:
This type of home loan is availed by people who wish to build or construct their own home according their needs. The application and approval process for home construction loan is slightly different from the common home loan. One of the important criteria for availing home construction loan is that the land on which you wish to construct your home must have been purchased within one year so that the cost of the land is also included in the total cost of the property.

No matter the kind of home loan you wish you apply for, it is best advised to do your research well about the lending institution to know if they are offering the scheme. At Indiabulls you would get NRI, home purchase loan and loan against property at the best interest rate.

Important Tips to Consider for Choosing the Best Home Loan Lender

Buying a home may seem to be an overwhelming task; however, if you have a good plan in place and execute the same in a seamless manner, then the process would become easy. One of the most important decisions you would need to make in your home buying process is to choose the best home loan finance company that would provide you the required funds. Considering the following tips would greatly help you choose the right lender for your loan:

Finalize on the property first and then choose the lender:

If you are looking to buy a home, you may like different properties that you would want to buy. Make sure that you zero down on the property that you to buy before applying for home loan. Once you choose the property, you would know exactly how much amount you would need and make your arrangements for the finance accordingly.

Reputation or Credibility of the lending institution:

If you do not have any prior experience working with any financial institutions it is advisable that you do a background check on the credibility and reputation of the lender. You can talk to your friends and family about the institution or you can even browse the internet to look for the best lender. Make sure that the housing finance company you choose to work with provides top quality customer service as your relation with them would span over a long time. Indiabulls is rated among the top 3 HFCs in India and has a reputation of providing top quality service to all loan applicants.

Quick Approval:
This is one of the most important factors to consider while choosing a home loan lender. Most of the Housing finance companies in India take about 10-12 days to process and sanction the loan application. Before approaching the lender for loan it is best advised to talk to people who have worked with them to know how long it took them to get their funds. This would help you make an informed decision. If you are looking to take loans upto 25 Lakhs at Indiabulls Housing Finance Ltd you would get your loan sanctioned within 48 hours.
 

Eligibility Criteria:
Every housing finance company in India has its own unique set of qualifying criteria for home loan applicants. The criteria differ from lender to lender depending on the credit history, age, income and the value of the property you wish to buy. Make sure that you do your research well about the lending institution to know if you qualify for the loan.
 

Type of Interest:
This is one of the most important factors to consider while choosing the housing finance company to avail home loan. There are mainly two types of interest rates – fixed rate and floating rate. If you opt for fixed interest rate loan, the interest would remain the same for the entire duration of the loan. Whereas, if you avail home loan on floating interest rate basis the interest would fluctuate depending on the rate prevailing in the market.  If you are approaching Indiabulls Housing Finance Ltd for home loans, you need to know that Indiabulls does not offer fixed rate home loans

Home Loan FAQs

Every month the housing finance companies in India receive lakhs of applications for home loans. The majority of the people who apply for home loan do not have much knowledge about the different aspects of home loan. If you are a first time borrower, the following FAQs will greatly help you understand the intricacies of home loan. 

Q. What exactly is down payment? When should I make this payment?

As a thumb rule, the housing finance institutions in India lend only about 80-85% of the property value. The remaining 15% of the money is expected to be paid by the buyer out of his/her own pocket. This amount is known as Down Payment. You need to pay this amount up front before applying for the loan. 

Q. What are the different fees/chargers included in the home loan?

If you wish to avail home loan from any housing finance company, you would be obliged to pay certain fees associated with it, which are:

• Transfer charges
• Registration fees
• Processing fees
• Stamp duty cost
• Interest charges

Q. Is it possible to apply for home with a co-applicant?

Yes, you can co-apply for home loan. When you co-apply for home loan, the income of both the partners would be considered and this would make you eligible for availing higher loan amount. 

Q. Can I get tax benefit on home loan?

Yes, under Section 80C and Section 24 of the Indian Income Tax Act, 1964 you can get tax rebate on your home loan. You can get tax rebate upto Rs. 1 lakh on the principal amount and Rs. 1.5 lakh on the interest amount repaid. 

Q. What is the process involved in taking a home loan?

Availing Home Loan essentially involves 3 steps:

• Application – You need to submit the application form (duly filled) along with all the essential documents required by the lender.

• Sanctioning – Once you submit the application form, the lending institution processes the same and conducts a thorough investigation on the credibility of the property you wish to buy and on your personal finance credentials. Based on the assessment of the lender you get a specific amount approved for a specific duration at a specific interest rate.

• Disbursal – Once the loan is sanctioned, the lender would send you an approval letter. If you approve the offer, the lender disburses the amount. 

Q. What is the process to repay the home loan?

You can repay your home loan by issuing post dated cheque leaves for the entire duration of the loan to the lender. You can also give a standing instruction to your lender for ECS so that every month the EMI amount gets automatically deducted from your bank account.

Indiabulls is rated as one of the top housing finance companies in India. If you are a first time borrower and are approaching Indiabulls for your loan, our team of highly trained professionals would guide you through every process and get your loan in a hassle free manner.